For many emerging companies, going public through an Initial Public Offering (IPO) is a path to raise capital into the company through the issuance of shares to the public. The capital raised from going public can be used to fund growth organically or through acquisitions. Going for an IPO also allows a company to reward employees through share option schemes as well as providing a major payday for entrepreneurs, venture capitalists and business partners after years of hard work in building a successful business.
What does it take to go for an IPO?
So what does it take for your company to list on Bursa Malaysia? Firstly, you have to assess if your company is suitable for listing. This depends on whether you intend to list on the Main Market or the ACE Market. Generally, the Main Market is suitable for larger companies, and this is reflected by certain quantitative requirements. For example, to qualify for the Main Market, a company needs to have a profit track record of 3 to 5 years. On the other hand, there is no such requirement for the ACE Market, which is a sponsor driven market for companies with good growth potential.
Companies that list on the ACE Market and continue to grow may eventually move into the Main Market. Secondly, an IPO candidate must demonstrate that it has competent management, good corporate governance, a strong financial position and cash flow, and strong risk management policies.
Timing an IPO
One of the often-asked questions is whether there is a right timing to go for an IPO. While it is common wisdom that the best timing is during a bull run where the share price is expected to perform better, it is difficult and more often than not futile to time an IPO in such a way